The present invention relates generally to an on-line risk auction system. In particular, the present invention relates to a method-end system for auctioning risk associated with a financial transaction via a distributed network.
A certain amount of risk exposure is associated with selling financial instruments, and in particular with medium and long term guarantees and medium term insurance policies. It would be most efficient to be able to transfer risk associated with such transactions in an expeditious and convenient manner.
A facility chosen by a seller to complete a transaction should assure be able seller of a competitive and least expensive execution. This can best be accomplished at the point in time when there is the greatest transparency with regard to the exposures. At the current time, there is no way to know which exposures will be authorized by a seller during an authorization period, the concentration of those exposures or the terms of those exposures. Presently, there is no way to know the market conditions which will prevail when such exposures are authorized.
What is needed is a method and system to create a forum to offer to transfer risk exposure and also to receive bids from qualified bidders, accept a bid and transfer the risk exposure.